4 weeks ago
5
The ability of private Filipino corporations such as SM Investments Corp., Ayala Corp. and Jollibee to successfully tap the international credit market is a welcome development in raising the profile of the Philippines in the international capital markets.
In an interview with Erwin Pato, executive vice president for treasury, finance and planning at SM Investments, (who was formerly head of Singapore’s Temasek’s global treasury) he pointed out that the recent recognition by International Financing Review Asia (IFR Asia) of SM Investments’ successful issuance last year of a $500 million five-year bond reflects confidence in Philippine corporate issuers and underscores SM’s reputation as a stable and well-managed investment option.
Furthermore, he added, “the good thing that is happening right now in the Philippine market is that you have more companies that are essentially bigger, which are also good, well-managed like us, that can access that market.”
Just 10 years ago, Pato recalls, SM investments access to the capital markets was limited primarily to the domestic market. However, he pointed out, “we have grown so much, our company has grown so much, that one of the things that opens up for us is essentially because of our size, the foreign market is interested in success stories like that.”
Filipino conglomerates that manage to successfully grow like SM Investments, Pato noted, can likewise tap the international capital markets.
“The offshore market, if you access it... first of all, it’s very deep, meaning if you’re a good credit, the size of what you can access there may be much bigger than what you can access in the Philippines because there is just a much bigger and a fund manager base there.”
The ability to access the offshore market, Pato explains, allows Filipino firms to diversify their funding source and spur economic growth.
SM Investments, the parent company of the SM Group, was awarded the “Philippine Capital Market Deal of the Year” by IFR Asia for its successful issuance of a $500 million five-year bond in 2024, underscoring the Sy-family corporation’s leadership in the capital markets and the strong confidence of global investors in the company’s financial strength.
IFR Asia cited SM Investments’ return to the US dollar bond market after a decade-long absence as a significant development for the Philippine corporate sector. The transaction, which was the largest five-year deal by a Philippine corporate in 2024, reopened the market amid volatile conditions and achieved competitive pricing at 35 basis points.
IFR Asia noted that SM Investments’ bond issuance attracted significant investor interest, given the relative scarcity of corporate issuances from the Philippines in recent years. The transaction was SM Investments’ first bond issuance since its $350 million 10-year note in June 2014.
The deal was arranged by leading global financial institutions, with HSBC, JP Morgan, Standard Chartered, and UBS acting as joint lead managers and joint bookrunners. BDO Capital and Chinabank Capital also participated as joint lead managers.
The success of SM Investments’ bond issuance, when global economic uncertainties kept many investors on the sidelines, attests to its solid fundamentals and the broader credibility of Philippine businesses.
According to SM Investments, a thriving capital market translates to sustained investments, job creation, infrastructure development and financial inclusivity – critical components for long-term economic resilience.
In its 2025 outlook for the Asia credit market (excluding Japan), Puja Shah, JP Morgan’s head of Southeast Asia DCM and Sustainable Finance Asia, had noted that 2024 was a busy year for Philippine bank issuers tapping the offshore market. Thus, she projected that Philippine banks would be more opportunistic this year.
Likewise, she said, “We do expect the sovereigns to continue to be active in the market as they were this year (2024), and we expect more corporate supply. We’ve had some very successful transactions this year with some companies, such as the SM Group. So I do expect some of the corporate issuers to come back to market next year (2025).”
Shah observed that “a lot of the corporate issuers will look at the US dollar market more as a diversified source of funding. The dollar-local currency differential is becoming lower for some of the Southeast Asian countries and therefore, (it is) more justifiable for them to look at the dollar market.”
She acknowledged, “In general, deals have done very well in the Philippines, and investors have been welcoming of Philippines corporate borrowers.”
Likewise, she said, “Onshore support for Philippine borrowers tends to be very strong. We expect that for next year (2025), this will remain a key attraction for offshore investors who buy into these papers. From an investor’s perspective, Philippines issuers should do relatively well.”
However, the recent policy direction of US President Donald Trump with regards to trade and tariffs has caused some turmoil that is causing volatility anew in financial markets. There are fears that the imposition of higher tariffs by the US against some of its trading partners such as Canada, Mexico and China, and possibly even its traditional European allies could disrupt global trade and stoke inflation.
